Monday, July 07, 2014

In Schoeps v. Free State of Bavaria, 13 Civ. 2048 (SDNY June 27, 2014)http://law.justia.com/cases/federal/district-courts/new-york/nysdce/1:2013cv02048/409721/54
the Hon. Jed S. Rakoff dismissed a case by Jewish heirs seeking to recover Nazi looted art that had been spirited to New York, and then repurchased by Bavaria, where the stolen artwork now proudly hangs in a Munich museum. The SDNY threw the case out pursuant to a motion to dismiss, which means that the plaintiff was deprived of his day in court and no factual record was created from which an appellate court could determine whether or not the plaintiff had proven that the work was stolen.

To understand why this decision is so repugnant to U.S. and New York policy, a bit of history is in order. Adolph Hitler and a band of criminals took control of Germany in the spring of 1933 through violence and intimidation. They abolished democracy and the rule of law and immediately set up a kleptocracy that targeted Jews and Jewish property. Following World War II (a war won by the U.S. and its allies), the U.S. participated in legal proceedings at Nuremberg. Hitler and the Nazi regime were deemed a band of criminals. The US and its Allies vowed in the London Declaration of 1943 to undo the Nazis property crimes against Jews.

From the beginning of the Nazi regime, New York law refused to recognize Nazi forced transfers and opened its courts to Jewish refugees, epitomize in the famous case of Holzer v. Reichbahn (1936) where Marcel Holzer, who had been thrown into a concentration camp and deprived his pension by Germany, was allowed to seize the furniture of the Nazi regime located at the German Consulate.

The Second Circuit and Southern District Court took a while to figure out that courts in New York are to be completely dedicated to reversing Nazi depredations. I am copying the landmark case below that eliminated all jurisdictional restraints on the courts of the Southern District of New York from declaring and returning property stolen from Jews:

Action by owner of all the stock in German
liability company against Dutch corporation which had converted such stock in
participation in plan with Nazi officials, seeking to follow proceeds of the
property in the hands of the transferee. On petition to amend a prior mandate
handed down in a prior appeal, 173 F.2d 71, the Court of Appeals, held that where subsequent to
mandate ordering plaintiff to refrain from alleging matters which would cause
court to pass on validity of acts of officials of German government, Executive
Policy of relieving American courts from any restraint upon exercise of their
jurisdiction to pass upon validity of acts of Nazi officials was declared,
mandate would be amended by striking out all restraints based on inability of
court to pass on such acts.

Mandate amended.

Where subsequent to order of court directing
plaintiff who claimed to have been deprived of his stock in a German
corporation, to refrain from alleging matters which would cause court to pass on
validity of acts of officials of the German government, Executive Policy was
declared in State Department release, stating that it was government's policy to
relieve Americancourts from restraint upon exercise of their jurisdiction to
pass upon validity of acts of Nazi officials, mandate previously issued would be
amended by striking out all restraints based on inability of court to pass on
acts of officials in Germany during period in question.

*375Bennet, House & Couts,
New York City, for plaintiff-petitioner; Victor House, Albert I. Edelman and
Werner Ilsen, New York City, of counsel.

Petition to amend the mandate of this court
handed down in a prior appeal in this case, 173 F.2d 71. Petition granted.

Before AUGUSTUS N. HAND, CLARK and FRANK, Circuit
Judges.

Petition to amend the mandate of this court
handed down in a prior appeal in this case, 173 F.2d 71. Petition granted.

PER CURIAM.

In the prior appeal in this case, 173 F.2d 71, 75-76, because of the lack of a definitive
expression of Executive Policy, we felt constrained to follow the decision of
this court in Bernstein v. Van Heyghen Freres Societe Anonyme, 2 Cir., 163 F.2d
246, certiorari denied 332 U.S. 772, 68 S.Ct. 88, 92 L.Ed. 357, by ordering the
plaintiff to refrain from alleging matters which would cause the court to pass
on the validity of acts of officials of the German government. Following our
decision, however, the State Department issued Press Release No. 296 on April
27, 1949, entitled: ‘Jurisdiction of United States Courts Re *376Suits for Identifiable Property
Involved in Nazi Forced Transfers.’ The substance of this Release
follows:

‘As a matter of general interest, the Department
publishes herewith a copy of a letter of April 13, 1949 from Jack B. Tate,
Acting Legal Advisor, Department of State, to the Attorneys for the plaintiff in
Civil Action No. 31-555 in the United States District Court for the
Southern District of New York.

‘The letter repeats this Government's opposition
to forcible acts of dispossession of a discriminatory and confiscatory nature
practiced by the Germans on the countries or peoples subject to their controls;
states that it is this Government's policy to undo the forced transfers and
restitute identifiable property to the victims of Nazi persecution wrongfully
deprived of such property; and sets forth that the policy of the Executive, with
respect to claims asserted in the United States for restitution of such
property, is to relieve American courts from any restraint upon the exercise of
their jurisdiction to pass upon the validity of the acts of Nazi
officials.’

The letter from Mr. Tate is then quoted,
pertinent parts of which follow:

‘1. This Government has consistently opposed the
forcible acts of dispossession of a discriminatory and confiscatory nature
practiced by the Germans on the countries or people subject to their controls. *
* *

‘3. The policy of the Executive, with respect to
claims asserted in the United States for the restitution of identifiable
property (or compensation in lieu thereof) lost through force, coercion, or
duress as a result of Nazi persecution in German, is to relieve American courts
from any restraint upon the exercise of their jurisdiction to pass upon the
validity of the acts of Nazi officials.’

In view of this supervening expression of
Executive Policy, we amend our mandate in this case by striking out all
restraints based on the inability of the court to pass on acts of officials in
Germany during the period in question. See 173 F.2d at pages 75-76. This will permit the district court to
accept the Release in evidence and conduct the trial of this case without regard
to the restraint we previously placed upon it.

C.A.2 1954.Bernstein
v. N. V. Nederlandsche-Amerikaansche, Etc.,210 F.2d 375, 1954 A.M.C. 569
So it is clear that New York State and the Second Circuit have committed - decades ago to providing remedies to Jews despoiled by the Nazi regime and their familes.

On Junuary 16, 2013 Secretary of State Hillary Rodham Clinton stated as follows:

U.S. DEPARTMENT OF STATE Office of the Spokesperson January 16, 2013
STATEMENT BY SECRETARY CLINTON
Holocaust-Era Looted Art
This month we commemorate the seventieth anniversary of the Inter-Allied Declaration against Acts of Dispossession Committed in Territories under Enemy Occupation and Control, known as the London Declaration of January 5, 1943. Beginning with the London Declaration, the United States implemented a policy of returning Nazi-confiscated art, including art taken through forced and coerced transfers, to its countries of origin, with the expectation that the art would be returned to its lawful owners. Under U.S. leadership, the international community has endorsed these principles as well.
In the 1998 Washington Principles on Nazi-Confiscated Art and the Terezin Declaration of the 2009 Prague Conference on Holocaust Assets, more than forty countries joined the United States in agreeing that their respective legal systems or alternative dispute resolution processes should facilitate just and fair solutions for art that was taken by the Nazis and their collaborators.
In reaffirming these commitments, the Department of State expresses no view on any issue currently in litigation. U.S. policy will continue to support the fair and just resolution of claims involving Nazi-confiscated art, in light of the provenance and rightful ownership of each particular work, while also respecting the bona fide internal restitution proceedings of foreign governments.

But our federal courts seem to have forgotten the lessons of history and appear to treat one of history's greatest property crimes - and the postwar laundering of Jewish property by German museum - as some kind of ordinary series of commercial transactions rather than the criminal conspiracy which they were.

In Schoeps v. Free State of Bavaria, 13 Civ. 2048 (SDNY June 27, 2014), the Southern District of New York forgot this history, this law and this commitment. Schoeps alleged a forced transfer of Picasso's Madame Soler from Nazi victim Paul Bartoldy-Mendelssohn in 1934. Shady art dealer Justin Thanhausser took Madame Soler and brought it to NY. A top Bavarian museum official came to New York and eventually arranged to have the Bavarian museum acquire it through a transaction involving a Leichtenstein trust in a transaction that the SNDNY concluded was structured to evade US taxes.

So where we have a transaction involving laundering stolen art that occurred in New York, involving a painting located in New York, structured as a criminal transaction to evade New York and federal taxes, and to repatriate the spoils of Adolph Hitler's thuggery, and where the courts of Germany provide absolutely no right to relief, the plaintiff correctly brought the case in New York, right?

Not according to the decision in Schoeps v. Free State of Bavaria where the court construes the facts against the plaintiff (while arguing that it is doing the contrary) and coming to the conclusion that Bavaria is shielded in sovereign immunity.

California federal courts are getting it right. Let's hope that the Second Circuit reverses this terrible decision and orders the SDNY to let the case proceed. It is about time that the courts shouldered the responsibility of carrying out the task entrusted to them and taking the criminal profits away from the Nazi wrongdoers and their successors-in-interest.

Partner in Manhattan law firm Dunnington Bartholow & Miller LLP in New York City litigating in federal and state courts and arbitrations. Experienced trial and appellate practitioner. Author: Copyright Litigation Handbook (Thomson Reuters 2015-2016). The New York Law Journal called it "an indispensable guide". Serve on the Board of Directors of the Federal Bar Association, served as Chair of the Circuit Vice Presidents, Vice President for the Second Circuit and General Counsel. Member Board of Governors, National Arts Club. President, Network of Bar Leaders (2013-2014).
Attorney advertising disclaimer - prior results do not guarantee success. The statements and opinions voiced here are my own and not of my law firm.

1 comment:

Anonymous
said...

Facinating subject , I saw the Klimt from vienna musem were finaly given back to their original owners a couple of years ago due to US court decision.

As you said the way those cases were treated untill now are outrageous, and to many Nazis and nazis robbed properties were left out of the justice net .

About Me

Partner in Manhattan law firm Dunnington Bartholow & Miller LLP in New York City litigating in federal and state courts and arbitrations. Experienced trial and appellate practitioner. Author: Copyright Litigation Handbook (Thomson Reuters 2015-2016). The New York Law Journal called it "an indispensable guide". Serve on the Board of Directors of the Federal Bar Association, served as Chair of the Circuit Vice Presidents, Vice President for the Second Circuit and General Counsel. Member Board of Governors, National Arts Club. President, Network of Bar Leaders (2013-2014).
Attorney advertising disclaimer - prior results do not guarantee success. The statements and opinions voiced here are my own and not of my law firm.